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Savvy Planners Look To Mortgage Insurance Cover

Apr 16, 2008
Insurance specialists and independent brokers are offering Brits a chance to get low cost insurance protection that may allow them to keep their homes and protect the financial future of their families. Mortgage insurance cover is available at 40 to 80 per cent of the monthly premiums charged by high street banks and large institutional lenders. Consumers need to take control of their own situations, however, in order to receive the best benefits at the best rates.

Mortgage insurance cover is a short-term insurance product that provides monthly payment benefits to covered individuals who are unable to work due to involuntary redundancy, illness, or accident. Any of these covered events would lead to monthly payments based on the coverage amount. Coverage amounts or monthly payments are usually derived from the monthly mortgage or normal income earned by the individual covered. Of course, the higher the coverage obtained, the more expensive the monthly premium outlays.

Mortgage insurance cover is part of a handful of short-term income payment protection products that fall under an umbrella know as payment protection insurance (PPI). These products are different from longer-term insurance known as income protection insurance. While there are opportunities for longer payout periods, most plans involved monthly payments for 12 to 24 months. Longer terms are less advantageous based on premium costs, and the availability of more beneficial long term insurance products.

Exclusion periods are a consideration for the mortgage payment protection products. Most insurers require 30 to 90 day periods after the coverage begins, in which no claims can be filed. This is to protect them from people falsely attempting to acquire insurance in lieu of pending job loss.

While involuntary redundancy is an important covered event protected by the insurance, voluntary redundancy is not. This means, employees forced out of their jobs would likely collect benefits, while employees opting out would not. The involuntary redundancy component of the income payment protection products is part of what separates it from income protection. Income protection does not cover unemployment.

Consumers need to be their own advocates when looking to mortgage payment cover. Many institutional lenders are notorious for taking advantage of unwitting customers in order to include expensive products in combination with mortgages or other loan products. Sometimes, the banks will mention the coverage but suggest it is required with the deal. Others simply charge the premium and note the terms in fine print with the information from the other product. Some banks have event been more aggressive and have attempted to sell the plans to people ineligible to receive benefits, such as retired people or part time employees.

Mortgage insurance cover provided by an independent broker may be a consumer's best option when it comes to protection their most expensive investment. The State does not provide much in the way of short-term assistance. Brits must become knowledgeable about their needs and turn to brokers knowledgeable about available products to help meet those needs. Benefits, terms, and conditions are vital to making payment protection work for a policy holder.
About the Author
Simon Burgess is Managing Director of the award-winning British Insurance, a specialist provider of mortgage insurance cover .
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